TiVo 2008 Annual Report Download - page 74

Download and view the complete annual report

Please find page 74 of the 2008 TiVo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 110

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110

Table of Contents
The following table is a reconciliation of financial assets measured at fair value using significant unobservable inputs (Level 3) during the year ended
January 31, 2009 (in thousands):
Auction Rate Securities
Twelve Months Ended January 31, 2009
Balance, beginning of period $ —
Transfer into Level 3 5,000
Total unrealized losses included in other comprehensive income (1,056)
Balance, January 31, 2009 $ 3,944
Marketable securities measured at fair value using Level 3 inputs are comprised of auction rate securities. Although auction rate securities would
typically be measured using Level 2 inputs, the recent failure of auctions and the lack of market activity and liquidity required that these securities be
measured using Level 3 inputs. The underlying assets of the Company's auction rate securities are collateralized primarily by student loans guaranteed by the
U.S. government. The fair value of our auction rate securities was determined using a pricing model that market participants would use that considered
projected cash flows for the issuing trusts, underlying collateral and expected yields. Projected cash flows were estimated based on the underlying loan
principal, bonds outstanding, and payout formulas. The weighted-average life over which cash flows were projected considered the collateral composition of
the securities and related historical and projected prepayments. The discount rates that were applied to the pricing model were based on market conditions and
rates for comparable or similar term asset-backed securities as well as other fixed income securities.
5. BARTER TRANSACTION
During the second quarter of fiscal year 2008, the Company entered into a barter transaction, exchanging TiVo Series2 standard definition DVR
inventory with a net book value of $2,774,000 for barter credits that are redeemable for a percentage of future purchases of advertising media and other
services from certain vendors. The barter credits were valued at the fair value of the inventory exchanged, which was determined to be $1,785,000. The
resultant pre-tax loss on this exchange of $989,000 was included in the gross margin in the Company's consolidated statement of operations for the fiscal year
ended January 31, 2008.
In the fiscal year ended January 31, 2008, the Company utilized trade credits in the amount of $342,000.
In the fiscal year ended January 31, 2009, the Company utilized $116,000 in trade credits. Additionally, the Company wrote off another $522,000 in
trade credits based on lower expected purchases of advertising media and other services that can be applied against the credits prior to their expiration. As of
January 31, 2009, the Company had $806,000 in trade credits, recorded on the balance sheet. The credits expected to be utilized in the next twelve months in
the amount of $77,000 are included in prepaid expenses and other current assets and the remaining $729,000 is included in other long-term assets in the
Company's consolidated balance sheet at January 31, 2009. The Company evaluates the recoverability of the credits on a quarterly basis and expects to utilize
all credits recorded prior to their expiration in July 2015.
71